Bill Text: HI HR88 | 2014 | Regular Session | Introduced

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Bill Title: Employees' Retirement System; Actuarial Methods and Assumptions; Evaluation

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Introduced - Dead) 2014-03-12 - Referred to LAB, FIN, referral sheet 33 [HR88 Detail]

Download: Hawaii-2014-HR88-Introduced.html

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HOUSE OF REPRESENTATIVES	H.R. NO.	88
TWENTY-SEVENTH LEGISLATURE, 2014
STATE OF HAWAII

HOUSE RESOLUTION

 

 

requesting the employees' retirement system to review and evaluate its actuarial methods and assumptions.

 

 

 

     WHEREAS, the Employees' Retirement System of the State of Hawaii serves over one hundred fifteen thousand active members, retirants, beneficiaries, and inactive vested members, both within and outside the State, and currently pays approximately $1,100,000,000 in annual pension benefit payments to more than forty-one thousand retirants and beneficiaries; and

 

     WHEREAS, in its Report to the Board of Trustees on the 88th Annual Actuarial Valuation for the Year Ending June 30, 2013, the Employees' Retirement System reported a funded ratio of sixty per cent (based on smoothed assets), an actuarial accrued liability of $21,244,000,000, and an unfunded actuarial accrued liability of $8,495,000,000; and

 

     WHEREAS, in its investment performance report for the third quarter of 2013, dated September 30, 2013, the Employees' Retirement System reported investments and assets of approximately $13,000,000,000, which could be used to pay the $21,244,000,000 of actuarial accrued liability; and

 

     WHEREAS, in determining costs and liabilities, actuaries use assumptions about the future, such as rates of salary increase, probabilities of retirement, termination, death and disability, and an investment return assumption; and

 

     WHEREAS, in addition to the actuarial assumptions, actuaries also make use of an actuarial funding method to allocate costs to particular years; and

 

     WHEREAS, according to the Employees' Retirement System, the actuarial method used in its valuation is the Entry Age Actuarial Cost Method; and

 

     WHEREAS, according the Employees' Retirement System, the assumptions used in its valuation included the following:

 

     (1)  Economic assumptions, including assumptions regarding such factors as investment return, payroll growth rate, and salary increase rate;

 

     (2)  Demographic assumptions, including assumptions regarding such factors as post-retirement mortality rates, pre-retirement mortality rates, disability rates, termination rates, and retirement rates; and

 

     (3)  Other assumptions, including assumptions regarding such factors as marriage, age difference between spouses, various elections that members may make, administrative expenses, the timing of various events that are relevant to eligibility and payment of benefits, etc.; and

 

     WHEREAS, it is necessary to both understand the potential impact of the actuarial methods and assumptions used and to ensure that the actuarial methods and assumptions used are current and appropriate, as current and future members, retirants, beneficiaries, and inactive vested members are depending on the sustainability and solvency of the Employees' Retirement System; now, therefore,

 

     BE IT RESOLVED by the House of Representatives of the Twenty-seventh Legislature of the State of Hawaii, Regular Session of 2014, that the Employees' Retirement System is requested to hire and work with a consultant to review and evaluate the actuarial methods, assumptions, and other components that impact the funding of the Employees' Retirement System; and

 

     BE IT FURTHER RESOLVED that the Employees' Retirement System is requested to report its findings on the methodology and assumptions currently used to estimate future pension benefit payments and recommendations on the contribution rates and other funding sources to ensure the sustainability and solvency of the Employees' Retirement System; and

 

     BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Chairperson of the Board of Trustees and to the Administrator of the Employees' Retirement System of the State of Hawaii.

 

 

 

	OFFERED BY:	_____________________________

Report Title: 

Employees' Retirement System; Actuarial Methods and Assumptions; Evaluation